Nearly 2 years after Ike, UTMB finances are in the black

Published 5:30 am, Monday, May 24, 2010

GALVESTON — Although other campuses in the University of Texas system are forecasting deficits, the University of Texas Medical Branch is in the black after years of red ink and a disastrous period following Hurricane Ike.

UTMB was bleeding $40 million a month in lost revenue after the hurricane ravaged Galveston almost two years ago.

Bill Elger, UTMB executive vice president and chief financial officer, attributed the climb back to financial solvency to a $46 million annual infusion of cash from the Legislature, more paying patients, fewer indigent patients and better budgeting.

“We're in the black, and we want to stay in the black,” Elger said.

Elger foresees UTMB ledgers being on the plus side this year and next year, despite 5 percent across the board budget cuts ordered by Gov. Rick Perry. Elger says the 5 percent cuts will trim UTMB's $1.4 billion budget by about $31 million.

This year's budget was adopted in September, but Elger didn't begin to talk publicly about UTMB's financial success until March.

Death spiral

The achievement is another remarkable turnaround for a school that in previous years struggled to balance its budget while other UT campuses thrived. UTMB grappled with its finances every year for nearly a decade until Hurricane Ike struck in 2008 and sent the medical school into a death spiral. The storm caused an estimated $1 billion in damage and forced at least 2,300 layoffs from its 12,000-strong workforce.

The UT Board of Regents last year appeared to be set on dismantling the state's oldest medical school until the Legislature forced the board to do an about face. As a result, UTMB embarked on a $1 billion reconstruction plan. The new construction will include hardening the hospital against future storms.

Elger said FEMA is paying 90 percent of all storm damage repairs, but won't pay for additional improvements or landscaping. About 350 architects and contractors are on the UTMB campus preparing the way for construction that is expected to get into full swing next year. At least 1,000 workers are expected to be on campus at the height of construction, Elger said.

UTMB is going ahead with planning for a new surgery tower, an education building and other structures even as the state struggles with a projected $18 billion deficit in the upcoming budget cycle.

The medical school opened its $61 million Victory Lakes outpatient clinic in League City two months ago, adding 150 jobs. Elger said that eventually Victory Lakes could be expanded to include education and research.

Under pressure from the Legislature to increase the number of nurses and doctors to meet critical shortages, UTMB plans to increase its nursing school enrollment 100 percent and medical school enrollment 25 percent by 2020. The 2009 freshman medical school class enrollment is 229, UTMB spokesman Raul Reyes said, up from about 200 two years ago.

Job cuts elsewhere

The UTMB expansion contrasts with the UT Austin campus, where President William Powers announced two weeks ago that 200 administrative jobs would be cut to cope with a projected $14.6 million budget deficit.

UTMB and Texas Tech University provide medical care for the state prison system under an arrangement that requires the schools to pay for services up front, then wait for the Legislature to pay them back when it convenes every two years.

UT administrators have asked to renegotiate the contract, but UTMB isn't waiting. UTMB President David Callender last week announced that 363 jobs would be cut from prison system health care as of July 21.

Elger said the job cuts and reduced hours of health care service, with the exception of emergency care, would help stem financial losses.

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